We are now doing infrastructure work. There will be new projects that will be coming on stream. When done, Migaa will be the single biggest golfing estate in the country with about 4,000 residences.
Are you keeping to your timelines?
We are running slightly behind schedule. The capital requirements are big. Costs also change over time. The fundraising we did last year (we raised Sh500 million) has helped us. Most of this money will be used to put up infrastructure at Migaa.
When are you looking to have the first batch of people move in?
Next month. Mitini residences are complete. This is a mix of cottages and apartments. Occupation will begin either late this month or early May.
How will your shareholders get to benefit from a project like Migaa?
We will be able to generate profits out of our projects. Part of these profits goes back to our shareholders either in terms dividends or upside in terms of the shares.
One has to understand that real estate business is long-term. We keep investing in the projects, we keep investing in the assets which we have, land, and so the value to the shareholders is not eroded. Land values are going up and there is more value being added in terms of infrastructure.
When will development of the commercial areas in Migaa start?
We will break ground in May for some of the commercial areas. The sports complex and clubhouse will be concessioned to an Egyptian company that specialises in entertainment to develop and manage. They will be doing it to world class standards.
Do you see yourselves going into Real Estate Investment Trusts (Reits)?
Yes. We are in the process of talking with advisors on how we will benefit. As Reits managers, we will be establishing development Reits and once the projects are complete and generating income, we will convert them into investment Reits.
The question for us is whether we are going to manage, promote or how much we are going to outsource to other managers and entities. But we are at an advanced stage of putting together our application.
There is an argument that we do not have properties of a standard required for the Reits market.
Do you see such properties being developed?
The grade of properties we have is adequate to begin with, in terms of the structure of income flowing from those properties.
Kenya has a very good quality of real estate in the region. Once the Reits mechanism begins to show value we will then, probably, see developers plowing more money back into the projects.
After Migaa, are you looking at any other big projects in the near future?
We have two other projects. One in Kisumu called Lakeview, a 92-acre project in Riat Hills with a view of the airport, city and lake.
This is a mixed development, anchored on hospitality, on hotels and conferencing. We expect to have about 600 homes: a mix of bungalows, villas and apartments. We also have another project in Kwale, called Llango.
After Morningside Office Park (on Ngong Road, Nairobi), you went into mixed use developments.
Do you plan to go back to developing commercial projects?
Our five-year strategy says that we need to come back and do some commercial properties – probably some office parks. We also want to start penetrating the middle-income segment.
It is a high demand segment. Also, the price points that we should be able to meet our demand in terms of returns and meet the needs of buyers.
Are you moving into the middle-income segment within the next few years or after you are done the projects that you have?
What we want to do is establish a track record and complete the projects that we have. But once the projects are at a certain stage of completion, say 70 or 80 per cent, we break new ground.
The middle-income is tricky. The higher end was easier to go into, there is a well-defined market. But what we have begun to see is that prices at that higher segment are tightening.
It has been argued that property on the market is overpriced.
What is your take on this?
It is a demand and supply situation. There is still a big gap between demand and supply. At the very high-end demand and supply are beginning to converge. Prices are tightening and even coming down in some areas.